The Perks of a Premium Credit Card
Flashing a premium credit card can be a thrill as for many people they're seen as a sign you've made it. But are they actually a sign that you are wasting your money on a status symbol? In this guide we'll explain what a premium credit card is, when they're useful and what you should consider when deciding whether to get one.
What is a Premium Credit Card?
Premium credit cards, often referred to as black or purple credit cards, are cards which charge an annual fee but offer cardholders a range of exclusive benefits in return. Often viewed as a status symbol, premium cards are only offered to high-earning big spenders. For those accepted they offer a high credit limit and a number of perks that are difficult, or expensive, to find elsewhere.
How Much Do They Cost?
Premium credit cards all come with an annual fee. The cheapest cost around £100 a year, but some charge up to £500. It’s only worth getting a card and paying this fee if you’re going to make full use of the benefits on offer.
APRs on premium credit cards tend to look very high, often around 50%. This is because, under the Consumer Credit Act, the annual fee has to be included in the APR calculations.
Purchase rates tend to be charged at 16% to 19% and there is rarely a 0% interest introductory offer. So it’s important to only use a premium credit card if you’re confident you can repay the bill in full each month, otherwise the interest you pay will dwarf any benefits you receive.
What Perks Can They Come With?
Exactly what you get depends on the card, but a popular benefit is a concierge or personal assistance service. This will likely be available 24 hours a day to help you arrange or organise almost anything. Services typically include booking travel reservations, hotels, flights and airport transfers as well as leisure activities such as theatres and restaurants. A concierge or personal assistant will also provide a personal shopping service, locate hard-to-find gifts and send flowers and gifts on your behalf. Other perks typically include access to exclusive airport lounges, worldwide travel insurance, car breakdown cover, home emergency cover and a generous rewards scheme.
Should I Get One?
1. Do you always pay your balance off each month?
- Yes: Go to Question 2
- No : A premium credit card is not for you, you'll end up paying a fortune in interest. Instead, consider an interest-free balance transfer card or a card offering 0% on purchases.
2. Are you cash-rich and time-poor?
- Yes: Go to Question 3
- No: if you don’t have cash to spare then you shouldn't be spending money on the annual fee for a premium credit card. A cashback or rewards credit card may be a better option.
3. Would you use a concierge service to book nights out or holidays?
- Yes: Got to Question 4
- No: A concierge is the main perk on most premium cards. If you won’t use it the annual fee for the card probably isn’t worth it. Go through the list of perks and work out what you will use and if you're prepared to pay the fee for those services
4. Do you earn over £50,000 and have a good credit history?
- Yes: You stand a good chance of being accepted for a premium credit card. Speak to your bank or current credit card provider to find out about the cards they offer.
- No: You are unlikely to be eligible for a premium credit card.
What to Watch out For
Annual fees on premium cards can be massive, so check the fee before you apply and consider whether it’s worth it. Paying a fee of £700 or so and not using the card will be a waste of money. In many cases some of the perks you get with a premium credit card can be found cheaper elsewhere. Alternatively you might already have them. For example, most packaged bank accounts offer travel insurance and car breakdown cover. Also think about how often you will use a concierge service or airport lounge. If you won’t make regular use of these perks, it’s unlikely that a premium credit card is right for you.